Houston Guide to Texas Property Insurance Law & Mold Damage

Estimated reading time: 11 min read

Introduction: Why Houston Homeowners Need to Know Their Rights

Houston’s warm, humid climate and frequent severe weather—from torrential spring storms to the lingering after-effects of hurricanes in the Gulf—create the perfect breeding ground for mold damage. Unfortunately, many Houston policyholders discover that filing a mold-related property insurance claim can trigger unexpected resistance from insurers: delays, partial payments, and outright denials are common. Texas law gives homeowners powerful remedies, but only if they understand and invoke them. This comprehensive guide, written with a slight bias toward protecting policyholders, walks you step-by-step through Texas statutes, deadlines, and strategies so you can forcefully advocate for your claim or dispute.

Whether you are battling a lowball settlement for hidden attic mold after Hurricane Harvey, or facing a sudden denial because your insurer blames “pre-existing” moisture, the information below will help you:

• Identify relevant provisions of the Texas Insurance Code.

• Recognize unfair claims-handling tactics and statutory deadlines.

• Collect persuasive evidence and invoke the policy’s appraisal clause.

• Escalate your dispute to the Texas Department of Insurance (TDI) or the courts.

Most importantly, you will learn when to involve experienced advocates such as Louis Law Group to maximize recovery. If your claim has been delayed, underpaid, or denied, call 833-657-4812 for a free case evaluation and policy review.

Understanding Texas Property Insurance Law

Key Statutes Every Houston Homeowner Should Know

Texas provides some of the nation’s most robust statutory protections for policyholders. The provisions most frequently invoked in property insurance disputes include:

• Texas Insurance Code Chapter 542 (Prompt Payment of Claims Act). Requires insurers to acknowledge, investigate, and pay or deny claims within strict windows. Missed deadlines trigger interest penalties at** 18% per year** plus attorney fees.

• Chapter 541 (Unfair Settlement Practices). Prohibits misrepresentations, unreasonable delays, or failure to offer a fair settlement. Violations can result in treble damages.

• Texas Deceptive Trade Practices Act (DTPA). In limited situations, homeowners can tack on consumer-protection claims for additional damages and attorney fees.

Recent Texas Supreme Court decisions such as Barbara Technologies Corp. v. State Farm Lloyds (2019) and Ortiz v. State Farm Lloyds (2019) clarified that an insurer may still face statutory interest and attorney-fee liability even after paying an appraisal award late. These rulings strengthen policyholders’ leverage when an appraisal drags on or a carrier dribbles out payments.

Prompt Payment Deadlines

• 15 calendar days to acknowledge the claim after you report it (20 days for surplus lines).

• 15 business days after receiving all requested documentation to accept or deny the claim (extendable to 45 days with written notice).

• 5 business days to pay the claim after agreeing to coverage.

If your insurer ignores these deadlines, document each violation meticulously; it forms the basis for interest penalties and bad faith exposure.

Common Property Insurance Disputes in Texas

1. Mold Damage (Houston’s Persistent Threat)

Mold thrives in Houston’s subtropical climate. After roof leaks, HVAC failures, or hurricane flooding, spores can spread behind drywall or under flooring within 24–48 hours. Typical insurer pushback includes:

• Invoking “microbial exclusion” or caps (e.g., $5,000) without verifying whether additional water damage coverage applies.

• Blaming pre-existing conditions or homeowner negligence.

• Delaying indoor air-quality testing or destructive testing needed to locate hidden colonies.

2. Wind and Hail Claims

Spring supercell storms regularly batter Harris County. Disputes often arise over matching roof shingles, underpayment for code upgrades, or depreciation calculations on older roofs.

3. Hurricane and Tropical Storm Losses

While Hurricane Ike (2008) and Harvey (2017) are fading memories for insurers, legal deadlines for supplemental or re-opened claims can extend years if new damage surfaces. Policyholders routinely battle anti-concurrent causation clauses that attempt to exclude wind-driven rain or storm surge-related mold.

4. Water Leaks and Pipe Bursts

Freezing events like Winter Storm Uri (2021) showed that even Houston can face sub-freezing temperatures. Insurers frequently question whether homeowners took reasonable steps to heat or shut off water, leading to partial denials.

5. Fire and Smoke Damage

Disputes center on cleaning vs. replacing smoke-impacted materials and additional living expenses (ALE) for extended repairs.

Texas Legal Protections & Regulations

Statutory Deadlines (Statute of Limitations)

• Breach of contract (policy benefits): four years from the date of breach, unless the policy contractually shortens it (many policies cut it to two years plus one day).

• Chapter 541 unfair practices: two years from the date you discovered, or reasonably should have discovered, the unfair act (extendable by 180 days with written notice of insurer misconduct).

• DTPA claims: two years.

Missing these windows can permanently bar recovery, so diarize deadlines as soon as a dispute arises.

Appraisal Clause Essentials

Most Texas policies include an appraisal provision letting either party demand an independent value determination when they disagree on the amount of loss (not coverage). Key points:

• No statutory deadline exists to demand appraisal, but courts expect a reasonably prompt invocation once an impasse is clear.

• Each side hires an appraiser; together they pick an umpire. A majority agreement is binding on amount of loss, but not on coverage.

• Under Barbara Technologies, insurers may still owe interest and fees if they invoked appraisal only after suit was filed or statutory deadlines lapsed.

Bad Faith and Extra-Contractual Damages

Texas recognizes a common-law duty of good faith and fair dealing. An insurer that knowingly or recklessly denies coverage without a reasonable basis can face:

• Compensatory damages (policy benefits, mental anguish, consequential losses)

• Punitive damages (in egregious cases)

• Attorney fees and 18% interest under Chapter 542

Recent Court Rulings Impacting Homeowners

• Menchaca v. USAA Texas Lloyds (2018): Clarified that policyholders can recover damages for insurer statutory violations even when not entitled to policy benefits, provided they suffered an independent injury.

• Alvarado v. Lexington Insurance Co. (S.D. Tex. 2021): Reaffirmed that an insurer’s failure to thoroughly investigate mold under a slab leak could constitute bad faith.

Steps to Take After a Property Insurance Dispute

1. Document Everything Immediately

Texas courts value contemporaneous evidence. Upon discovering mold or other damage:

• Take high-resolution photos and video from multiple angles.

• Save moisture-meter readings, lab reports, and remediation invoices.

• Keep a claim diary noting every call, email, and inspection with your insurer.

2. Obtain Independent Estimates

Hire a licensed mold assessor or experienced general contractor familiar with Texas Department of Licensing & Regulation (TDLR) requirements. Independent bids rebut insurer “preferred vendor” estimates designed to save money.

3. Preserve Samples and Access

If demolition or remediation is urgent, notify the insurer in writing and offer an opportunity to inspect. Save samples of mold-impacted materials in sealed bags; they may be critical evidence if causation is contested.

4. Request a Certified Copy of Your Policy

Texas law entitles you to the full policy within 15 days of a written request. Knowing endorsements and exclusions early prevents surprise denials.

5. Send a Chapter 542 Demand Letter (if Deadlines Are Missed)

A concise, polite letter citing missed statutory deadlines often shakes loose payment. Include:

• Date of loss and claim number

• Timeline of insurer inaction or delay

• Reference to “Texas Insurance Code § 542.058” and request immediate payment plus 18% interest

6. File a Complaint with the Texas Department of Insurance

The TDI Consumer Protection division tracks patterns of unfair claims practices. File online or call 800-252-3439. Attach your evidence; the agency will ask the insurer for a written response. While not a substitute for a lawsuit, a TDI complaint can pressure the carrier and create a regulatory record.

7. Consider Invoking Appraisal

If the dispute is purely about cost—not coverage—formal appraisal can speed resolution. However, appraisal waives your right to litigate the amount later, so consult counsel first.

When to Seek Legal Help in Texas

Retaining counsel is advisable when:

• The insurer alleges wear-and-tear or pre-existing mold without scientific evidence.

• Settlement offers do not cover full remediation to Texas building codes.

• You face Concurrent Causation issues where wind, water, and mold overlap.

• Statutory deadlines or limitations periods are approaching.

Louis Law Group represents Houston homeowners exclusively on a contingency fee—no recovery, no fee. Our attorneys are licensed in Texas, familiar with Harris County courts, and unafraid to litigate bad faith. We coordinate industrial hygienists, estimators, and accountants to prove hidden mold damages and additional living expenses.

If your property insurance claim has been delayed, underpaid, or denied, call 833-657-4812 for a free case evaluation and policy review.

Local Resources & Next Steps

Texas Department of Insurance – File complaints, verify insurer licenses, and view consumer guides. Texas Insurance Code Chapter 541 – Full text of unfair settlement practices statute. Harris County District Clerk – Access local court filings for property lawsuits. Lone Star Legal Aid – Free or low-cost legal services for qualifying homeowners.

Checklist Before You Call an Attorney

• Collect all denial letters and payment summaries.

• Secure at least two independent remediation estimates.

• Download your full policy and any endorsements.

• Chronologically organize emails, phone logs, and inspection photos.

Arriving prepared helps your attorney evaluate your claim quickly and leverage statutory penalties in negotiations.

Disclaimer

This guide is for informational purposes only and does not constitute legal advice. Laws and regulations change, and application to your specific situation may vary. Consult a licensed Texas attorney before taking action on any insurance dispute.

Take Action Now

Time limits on Texas property insurance disputes are unforgiving. Evidence degrades, memories fade, and mold spreads. Don’t let insurer delays drain your finances or jeopardize your family’s health. Call Louis Law Group at 833-657-4812 for a free case evaluation and policy review today.